New SECTION 1 SUMMARY - Axmin Inc · 2019. 2. 8. · Summary ii March 2011 Passendro Gold Project...

Summary i March 2011 Passendro Gold Project Bankable Feasibility Study Optimisation & Update

SECTION 1 SUMMARY

Summary ii March 2011 Passendro Gold Project Bankable Feasibility Study Optimisation & Update

PASSENDRO GOLD PROJECT

BANKABLE FEASIBILITY STUDY OPTIMISATION &

UPDATE SUMMARY

REPORT

Prepared by SENET on behalf of:

AXMIN Inc.

Summary iii March 2011 Passendro Gold Project Bankable Feasibility Study Optimisation & Update

Authors: Neil Senior Project Sponsor FSAIMM

Philemon Bundo Principle Process Engineer MSAIMM

Hugo Swart Project Manager

Date: March, 2011

_______________ _______________ _______________

Philemon Bundo Pieter Theron Neil Senior

Author Author Principal Supervisor

Disclaimer:

This Study Report has been prepared by SENET, in collaboration with Golder Associates (UK) Ltd, AMEC and

SRK (UK), for AXMIN Inc and presents the proposed design concept, estimated costs, and development schedule

for AXMIN‟s Passendro Project in the Central African Republic. SENET did not conduct a legal review of

ownership, property boundaries, lease agreements or claim notices. The use and/or reliance on the contents of

this Feasibility Study is at the sole risk of the user. Nothing in this study shall constitute or provide for, and SENET

shall not be considered to have rendered, any legal or financial opinion(s) regarding the feasibility of the Project or

regarding any other matter.

Summary iv March 2011 Passendro Gold Project Bankable Feasibility Study Optimisation & Update

Table of Contents SECTION 1 Summary ..................................................................................................... i

1.1 Summary .............................................................................................................. 1-1

1.2 Introduction and Scope of Services ...................................................................... 1-2

1.2.1 Introduction ................................................................................................... 1-2 1.2.2 Scope of Services ......................................................................................... 1-2

1.2.2.1 SRK Scope of Services .......................................................................... 1-3 1.2.2.2 AMEC Scope of Services ....................................................................... 1-3 1.2.2.3 Golder Associates (UK) Ltd Scope of Services ...................................... 1-3 1.2.2.4 SENET Scope of Services ..................................................................... 1-3

1.3 Property Description and Location: Ownership and History .................................. 1-4

1.3.1 Location and Access ..................................................................................... 1-4 1.3.2 Mineral Rights ............................................................................................... 1-4 1.3.3 Interest in the Property .................................................................................. 1-6 1.3.4 Royalties ....................................................................................................... 1-6 1.3.5 Mineralised Zones ......................................................................................... 1-6 1.3.6 Accessibility .................................................................................................. 1-6 1.3.7 Climate .......................................................................................................... 1-6 1.3.8 Topography, Elevation and Vegetation .......................................................... 1-7 1.3.9 History ........................................................................................................... 1-7

1.4 Exploration & Geology ........................................................................................ 1-11

1.4.1 Introduction ................................................................................................. 1-11 1.4.2 Geology of the CAR .................................................................................... 1-11 1.4.3 Local Geology ............................................................................................. 1-12 1.4.4 Deposit types .............................................................................................. 1-13 1.4.5 Exploration .................................................................................................. 1-14 1.4.6 QAQC ......................................................................................................... 1-16

1.5 Mineral Resources ............................................................................................. 1-18

1.6 Ore Reserves ..................................................................................................... 1-21

1.7 Mining ................................................................................................................ 1-28

1.8 Metallurgical Testing and Process Plant ............................................................. 1-30

1.8.1 Mineralogy .................................................................................................. 1-30 1.8.2 Comminution ............................................................................................... 1-31 1.8.3 Gravity Recoverable Gold ........................................................................... 1-32

1.8.3.1 CIL Extraction ...................................................................................... 1-32 1.8.4 Recovery ..................................................................................................... 1-33 1.8.5 Cyanide Destruction .................................................................................... 1-35 1.8.6 Viscosity and Rheology ............................................................................... 1-36 1.8.7 Settling ........................................................................................................ 1-36 1.8.8 Process Plant and Design Criteria ............................................................... 1-36

1.8.8.1 Crushing .............................................................................................. 1-38 1.8.8.2 Milling & Classification.......................................................................... 1-38 1.8.8.3 Gravity ................................................................................................. 1-38 1.8.8.4 CIL ....................................................................................................... 1-39 1.8.8.5 Cyanide Detoxification.......................................................................... 1-39 1.8.8.6 Acid Wash ............................................................................................ 1-40 1.8.8.7 Elution .................................................................................................. 1-40 1.8.8.8 Electrowinning ...................................................................................... 1-40

Summary v March 2011 Passendro Gold Project Bankable Feasibility Study Optimisation & Update

1.8.8.9 Regeneration ....................................................................................... 1-40 1.8.8.10 Calcining & Smelting ............................................................................ 1-40 1.8.8.11 Reagents.............................................................................................. 1-40

a. Lime ............................................................................................................ 1-41 b. Cyanide ....................................................................................................... 1-41 c. Caustic Soda ............................................................................................... 1-41 d. Sodium Metabisulphite ................................................................................ 1-41 e. Copper Sulphate ......................................................................................... 1-41 f. Hydrogen Peroxide ..................................................................................... 1-41 g. Hydrochloric Acid ........................................................................................ 1-41 h. Plant Diesel ................................................................................................. 1-41 i. Smelting Fluxes ........................................................................................... 1-42 j. Grinding Media ............................................................................................ 1-42 k. Mill Liners .................................................................................................... 1-42 l. Jaw Crusher Liners ..................................................................................... 1-42

1.8.8.12 Air Services .......................................................................................... 1-42 1.8.8.13 Plant Water Services ............................................................................ 1-42

1.9 Waste, Tailings and Water Management ............................................................ 1-43

1.9.1 Introduction ................................................................................................. 1-43 1.9.2 Site Selection .............................................................................................. 1-43 1.9.3 Tailings Delivery Options ............................................................................. 1-44 1.9.4 Design Basis Storage Requirement ............................................................. 1-45

1.9.4.1 Tailings Deposition Characteristics ...................................................... 1-46 1.9.5 Tailings Management and Disposal ............................................................. 1-46 1.9.6 Seismic Design ........................................................................................... 1-47 1.9.7 General Arrangement .................................................................................. 1-48 1.9.8 Site Surface Water Management ................................................................ 1-49 1.9.9 Groundwater Protection .............................................................................. 1-50 1.9.10 Supernatant Water Management ................................................................ 1-50 1.9.11 WSD Design ............................................................................................... 1-52 1.9.12 Mine Wide Water Balance ........................................................................... 1-53

1.9.12.1 Water management .............................................................................. 1-53 1.9.12.2 Water Balance Model ........................................................................... 1-54 1.9.12.3 Water Balance Modelling Results ......................................................... 1-55

1.9.13 Operation and Maintenance of the TMF and WSD Facilities ....................... 1-57 1.9.14 Closure of the TMF and WSD Facilities ....................................................... 1-57 1.9.15 Capital Cost ................................................................................................ 1-57 1.9.16 Conclusion .................................................................................................. 1-58 1.9.17 Recommendations ...................................................................................... 1-58

1.10 Human Resource Element and Manpower...................................................... 1-59

1.10.1 Human Resource Element .......................................................................... 1-59 1.10.2 Recruitment ................................................................................................. 1-59

1.10.2.1 Criteria Considered .............................................................................. 1-59 1.10.2.2 Major Characteristics ........................................................................... 1-60 1.10.2.3 Effective Recruiting .............................................................................. 1-60 1.10.2.4 Conclusion ........................................................................................... 1-60

1.10.3 Remuneration Policy ................................................................................... 1-60 1.10.4 Accommodation Policy ................................................................................ 1-61

1.10.4.1 Expatriates ........................................................................................... 1-61 1.10.4.2 Senior Managers (Nationals of Host Country) ...................................... 1-61 1.10.4.3 National Employees Recruited from Outside the Local Area ................ 1-61 1.10.4.4 National Employees Recruited by the mine from the Local Area .......... 1-62

Summary vi March 2011 Passendro Gold Project Bankable Feasibility Study Optimisation & Update

1.10.5 Industrial Relations Policy ........................................................................... 1-62 1.10.6 Safety and Health Policy ............................................................................. 1-62

1.10.6.1 Pre-Employment Medical ..................................................................... 1-62 1.10.6.2 Health Monitoring ................................................................................. 1-63 1.10.6.3 Medical Facilities .................................................................................. 1-63

1.10.7 Emergency Response Procedure ................................................................ 1-63 1.10.8 HIV/AIDS Policy .......................................................................................... 1-64 1.10.9 Training and Development .......................................................................... 1-64

1.10.9.1 Mining Personnel ................................................................................. 1-64 1.10.9.2 Plant Operating and Maintenance Personnel ....................................... 1-65

1.10.10 Community Relations Policy .................................................................... 1-67 1.10.11 Security Policy ......................................................................................... 1-68 1.10.12 Conclusion ............................................................................................... 1-69 1.10.13 Manpower Summary ................................................................................ 1-69

1.10.13.1 General and Administration ................................................................. 1-70 1.10.13.2 Mining .................................................................................................. 1-70 1.10.13.3 Process Plant ...................................................................................... 1-71

1.11 Onsite Infrastructure ....................................................................................... 1-72

1.11.1 Mining Infrastructure ................................................................................... 1-72 1.11.2 Plant and Administration Infrastructure ........................................................ 1-72

1.11.2.1 In-plant Roads ...................................................................................... 1-72 1.11.2.2 Buildings .............................................................................................. 1-72 1.11.2.3 Sewerage Treatment ............................................................................ 1-73 1.11.2.4 Waste Management ............................................................................. 1-73 1.11.2.5 Water Services ..................................................................................... 1-73 1.11.2.6 Potable Water Distribution .................................................................... 1-74 1.11.2.7 Fire Water ............................................................................................ 1-74 1.11.2.8 Communications .................................................................................. 1-74 1.11.2.9 Security ................................................................................................ 1-74 1.11.2.10 Transport ............................................................................................. 1-75 1.11.2.11 Air Strip ............................................................................................... 1-75 1.11.2.12 Staff Housing ....................................................................................... 1-75

1.11.3 Power Supply and Distribution .................................................................... 1-75 1.11.3.1 Power Supply ....................................................................................... 1-75 1.11.3.2 Power Distribution ................................................................................ 1-76 1.11.3.3 Fuel Storage and Distribution ............................................................... 1-76

1.12 Off site Infrastructure & Logistics .................................................................... 1-77

1.12.1 Routing ....................................................................................................... 1-77 1.12.2 Port Facilities .............................................................................................. 1-79

1.12.2.1 Transit Time ......................................................................................... 1-79 1.12.3 Road and Bridge Survey ............................................................................. 1-80 1.12.4 Method of Costing ....................................................................................... 1-80 1.12.5 Documentation ............................................................................................ 1-81

1.13 Mine Closure and Sustainability ...................................................................... 1-82

1.13.1 Introduction ................................................................................................. 1-82 1.13.2 Indicators .................................................................................................... 1-82 1.13.3 Rehabilitation Objectives ............................................................................. 1-83

1.13.3.1 Audits and Reviews .............................................................................. 1-83 1.13.4 Custodial Transfer - Sustainability ............................................................... 1-84

1.13.4.1 Physical Issues .................................................................................... 1-84 a. Infrastructure ............................................................................................... 1-84

Summary vii March 2011 Passendro Gold Project Bankable Feasibility Study Optimisation & Update

b. Transportation ............................................................................................. 1-84 c. Water .......................................................................................................... 1-84 d. Services ...................................................................................................... 1-85

1.13.4.2 Social Issues ........................................................................................ 1-85 a. Skilled or Unskilled Labour Force ................................................................ 1-85 b. Retrenchment ............................................................................................. 1-85 c. Medical ....................................................................................................... 1-85 d. Schooling .................................................................................................... 1-85

1.13.5 Financial Implications .................................................................................. 1-86

1.14 Environmental Assessment ............................................................................ 1-87

1.14.1 Introduction ................................................................................................. 1-87 1.14.1.1 AXMIN‟s Environmental and Socio-Economic Approach ...................... 1-87 1.14.1.2 Regulatory Context .............................................................................. 1-88

a. CAR Regulatory Requirements ................................................................... 1-88 1.14.2 ESIA Process .............................................................................................. 1-89

1.14.2.1 Environmental Assessment Methods ................................................... 1-89

1.15 CAPEX and OPEX Cost Estimate ................................................................... 1-91

1.15.1 Capital Costs ............................................................................................... 1-91 1.15.2 Mining Capital Costs ................................................................................... 1-91 1.15.3 Process Plant and Infrastructure Capital Costs ........................................... 1-92 1.15.4 Operating Costs .......................................................................................... 1-94 1.15.5 Mining Operating Costs ............................................................................... 1-95 1.15.6 Processing Plant Operating Costs ............................................................... 1-96 1.15.7 General & Administration Operating Costs .................................................. 1-97 1.15.8 Royalties and Refining ................................................................................ 1-98

1.16 Marketing and Financial Analysis .................................................................. 1-100

1.16.1 Sensitivity Analysis .................................................................................... 1-101

1.17 Implementation ............................................................................................. 1-104

1.17.1 Project Manager ........................................................................................ 1-104 1.17.2 Owner‟s Team ........................................................................................... 1-104 1.17.3 EPCM Consultant ...................................................................................... 1-105

1.18 Risks, Opportunities, Recommendations and Conclusions ........................... 1-107

1.18.1 Risks ......................................................................................................... 1-107 1.18.1.1 Logistics ............................................................................................. 1-107 1.18.1.2 Hydrology and Ground Water Conditions ........................................... 1-107 1.18.1.3 Heavy Fuel Oil Supplies ..................................................................... 1-107 1.18.1.4 Viscosity ............................................................................................. 1-107

1.18.2 Opportunities ............................................................................................. 1-107 1.18.2.1 Reserves & Mineral Resources .......................................................... 1-107 1.18.2.2 Coarser Grinds for Oxides .................................................................. 1-108 1.18.2.3 Hydropower ........................................................................................ 1-108 1.18.2.4 Biofuel and Alternative Fuels .............................................................. 1-108 1.18.2.5 Schedule ............................................................................................ 1-108 1.18.2.6 Gold Price .......................................................................................... 1-108

1.18.3 Conclusions and Recommendations ......................................................... 1-108

1.19 Certificates of Qulaified Persons ................................................................... 1-111

1.19.1 Neil Senior ................................................................................................ 1-111

Summary viii March 2011 Passendro Gold Project Bankable Feasibility Study Optimisation & Update

1.19.2 Dr John Arthur ........................................................................................... 1-113 1.19.3 Sean Cremin ............................................................................................. 1-115 1.19.4 Ciaran Molloy ............................................................................................ 1-117

Index of Tables Table 1-1 Exploration License Boundary Coordinates ................................................... 1-5

Table 1-2 Drilling Breakdown by Project within the Bambari Permit ............................ 1-15

Table 1-3 Passendro Mineral Resource Statement, 12th June 2009 ............................ 1-20

Table 1-4 Open Pits Schedule .................................................................................... 1-26

Table 1-5 Waste Excavation ....................................................................................... 1-27

Table 1-6 Ore Reserve Estimate ................................................................................. 1-27

Table 1-7 Mining Equipment Numbers ........................................................................ 1-29

Table 1-8 Support Equipment ..................................................................................... 1-29

Table 1-9 Comminution Summary Table ..................................................................... 1-31

Table 1-10 Summary of GRG and Intensive Cyanidation Results ................................. 1-32

Table 1-11 Summary of Leach Optimisation Results ..................................................... 1-33

Table 1-12 Individual Ore Recoveries and Reagent Consumptions ............................... 1-35

Table 1-13 Run of Mine Excavation Schedule ............................................................... 1-45

Table 1-14 TMF Staged Construction ........................................................................... 1-46

Table 1-15 Baceta River Abstraction Requirements ...................................................... 1-55

Table 1-16 TMF Estimated Construction Costs ............................................................. 1-58

Table 1-17 Water Dam Estimated Construction Costs .................................................. 1-58

Table 1-18 Total Labour Complement for the Passendro Project .................................. 1-69

Table 1-19 General and Administration Labour Summary ............................................. 1-70

Table 1-20 Mining Labour Summary ............................................................................. 1-71

Table 1-21 Plant Labour Summary ................................................................................ 1-71

Table 1-22 General Rehabilitation Plan ......................................................................... 1-83

Table 1-23 CAPEX and OPEX Allocations .................................................................... 1-86

Table 1-24 Capital Costs Summary ............................................................................... 1-91

Table 1-25 Mining Capital Costs Schedule .................................................................... 1-92

Table 1-26 Process Plant and Infrastructure Capital Cost Estimate Summary .............. 1-93

Table 1-27 Sustaining Capital ....................................................................................... 1-94

Table 1-28 Summary of Operating Costs ...................................................................... 1-95

Table 1-29 Overall Mining Cost Totals .......................................................................... 1-96

Table 1-30 Major Cost Centres ..................................................................................... 1-96

Table 1-31 Overall Process Costs LOM ........................................................................ 1-97

Table 1-32 LOM G & A Costs ........................................................................................ 1-98

Table 1-33 Summary of financial analysis results ........................................................ 1-101

Table 1-34 Gold Price Sensitivity ................................................................................ 1-102

Table 1-35 Capex Sensitivity ....................................................................................... 1-102

Table 1-36 Operating Costs Sensitivity ....................................................................... 1-102

Table 1-37 Fuel Price Sensitivity ................................................................................. 1-102

Summary ix March 2011 Passendro Gold Project Bankable Feasibility Study Optimisation & Update

Index of Figures

Figure 1-1 Location of CAR and AXMIN Exploration Prospects ...................................... 1-4

Figure 1-2 Location of AXMIN permits in relation to regional outcrop of Archaean

greenstone belts of Central Africa .................................................................................... 1-12

Figure 1-3 Geological map showing location of AXMIN‟s Bambari Project licence areas in

relation to the local greenstone belt geology and structures ............................................. 1-13

Figure 1-4 Location of main mineralised prospects and AXMIN drill collars in the

Passendro Project area .................................................................................................... 1-15

Figure 1-5 Main Zone Whittle Results ......................................................................... 1-21

Figure 1-6 Katsia Whittle Results ................................................................................. 1-22

Figure 1-7 Location of Deposits .................................................................................... 1-23

Figure 1-8 Main Zone Area ........................................................................................... 1-24

Figure 1-9 Katsia Area ................................................................................................. 1-24

Figure 1-10 French Camp Area .................................................................................. 1-25

Figure 1-11 Bacanga Head Area ................................................................................ 1-25

Figure 1-12 Head Grade vs. Predicted Tails Grade & Recovery Graph for Oxides ..... 1-34

Figure 1-13 Head Grade vs. Predicted Tails Grade & Recovery Graph for Transition . 1-34

Figure 1-14 Head Grade vs. Predicted Tails Grade & Recovery Graph for Sulphides . 1-35

Figure 1-15 Simplified Flowsheet (Passendro Process Plant) ..................................... 1-37

Figure 1-16 Optimum TMF and WSD Sites ................................................................. 1-43

Figure 1-17 Passendro Tailings Sample PSD ............................................................. 1-44

Figure 1-18 Typical Spigot Detail ................................................................................ 1-47

Figure 1-19 TMF Embankment Cross Section ............................................................ 1-48

Figure 1-20 TMF Upstream Underdrainage System .................................................... 1-48

Figure 1-21 Pre-deposition TMF and WSD General Arrangement .............................. 1-49

Figure 1-22 TMF Upstream Underdrainage System .................................................... 1-50

Figure 1-23 Side Slope Decant Sectional Details ........................................................ 1-51

Figure 1-24 Seepage Collection Valve House General Arrangement .......................... 1-51

Figure 1-25 Plan of Return Water Ponds .................................................................... 1-52

Figure 1-26 Typical Sections through the Water Storage Dam ................................... 1-52

Figure 1-27 Plan of Water Storage Dam ..................................................................... 1-53

Figure 1-28 Typical Water Balance ............................................................................. 1-54

Figure 1-29 Annual variation in WSD volume for an extreme dry scenario .................. 1-56

Figure 1-30 Training Program Outline ......................................................................... 1-66

Figure 1-31 Cameroon Transit Route ......................................................................... 1-78

Figure 1-32 Road Route in Central African Republic ................................................... 1-79

Figure 1-33 Logistics Transit Time Summary .............................................................. 1-80

Figure 1-34 NPV Sensitivity at 5% discount rate ....................................................... 1-103

Figure 1-35 IRR Sensitivity at 5% discount rate ........................................................ 1-103

Figure 1-36 Project Schedule Summary ................................................................... 1-106

Summary 1-1 March 2011 Passendro Gold Project Bankable Feasibility Study Optimisation & Update

1.1 SUMMARY

The Passendro Project area is located in the Ouaka province of the Central African Republic

(CAR), some 440km by road from the capital city of Bangui and 60 km north of the local

principal town of Bambari.

Exploration work undertaken by Asquith Resources Inc and AXMIN Inc since 1996 has

progressively resulted in an increase in the resource base to the point where a pre-feasibility

study was performed by GBM in 2006 to assess the economic viability of a potential

operation there. Since the results of this pre-feasibility study proved to be favourable, a full

bankable feasibility study was commissioned to follow. This was duly issued in 2008 and

exhibited favourable economics. Fiscal changes within the Central African Republic coupled

with the economic downturn resulted in an unavoidable delay in the project. New AXMIN

management facilitated the issue of a mining licence in 2010, by which time the study was

out of date. A revalidation or update and optimisation exercise was initiated. This report

represents the new feasibility study.

The continued exploration which had added to the resource base as well as continued

investigations led to a better understanding and definition of the project. The improving gold

price, a greater understanding of the pit slopes and inherent risks involved, as well as

improved metallurgical operating parameters through a thorough assessment of the

comminution characteristics and reagent consumptions led to a reassessment of the project

economics, which are seen to remain attractive. The results of all work carried out to date

have been compiled into this report and the resultant positive economics suggest that the

Passendro project implementation would be beneficial for all stakeholders, not least because

of its associated favourable and robust financial indications.

The Passendro Permit is situated in an area of relatively poorly developed infrastructure but

one in which regional developments such as the potential for electricity supply from the

hydro-electric scheme at the proposed Kembe facility could bring a substantial improvement

in the future, both in terms of the project economics as well as to the surrounding community

as a whole. Regional developments will also be supplemented by a proposed enhancement

of the off-site infrastructure such as the development of the Douala to Bangui road corridor to

be financed by the African Development Bank and Monetary Union of Central African States

(“CEMAC”), a facet that would be beneficial and contribute to the smooth and successful

implementation of the project.


1.2 INTRODUCTION AND SCOPE OF SERVICES

1.2.1 Introduction

With the completion of a pre-feasibility study in 2006, which considered both heap leach and

Carbon in Leach (CIL) process routes at differing annual throughputs, the conclusion was

that the heap leach option was not optimal. The CIL option however, did exhibit favourable

economics, so much so that AXMIN made the logical decision to carry the project to the next

step and perform a full bankable feasibility study for the Passendro project, which was duly

performed in 2008.

The original feasibility study can now not be considered suitable on account of it being out of

date, therefore it became necessary to revalidate the study to take into account current

circumstances, including costs and prices. In addition, subsequent to the previous feasibility

study issue, a further resource update was published in 2009 which added to the gold base

of the project and would therefore lead to improved economics including life-of-mine of the

project. The improving gold price, as well as the increased resource base has therefore also

contributed to justifying the revalidation exercise. At the same time it was thought prudent to

undertake certain optimisation measures to improve the overall levels of risk and accuracy

associated with the study. The measures have also taken into account all factors that have

changed in the intervening period.

AXMIN approached the very same consultants who contributed to the first bankable

feasibility study of 2008 with a view to essentially request a revalidation exercise in the same

capacity and using the same principles adopted for the first study but to take into account all

changes that have occurred since then, in particular with respect to costs, prices, baseline

information and the resource update.

AXMIN is pleased to confirm that ALL consultants who worked together to issue the first full

feasibility study did indeed agree to conduct the revalidation exercise and the work was

performed to the same specification as previously stipulated.

AXMIN approached SENET with a view to appoint them as lead consultant to compile the full

feasibility report.

AXMIN appointed various other consultants (SRK, Golder Associates and AMEC) to assist

SENET in carrying out the bankable feasibility study and optimisation update for the

Passendro Project which is envisaged to include a 3 million tpa open pit mining and gravity-

CIL process plant. The consultants‟ scope of services is discussed below.

The results of all work carried out to date have been compiled into this report and

conclusions and recommendations have been made.

1.2.2 Scope of Services

SRK, AMEC, Golder Associates (UK) Ltd and SENET carried out feasibility study work in

accordance with AXMIN‟s requirements to provide mining, environmental and engineering

services for the bankable feasibility study and optimisation update of the Passendro Project

located in the Central African Republic. The study, whose accuracy is 10-15%, will be used

to determine the commercial and technical feasibility of the project.

The individual scope of services is outlined below.


1.2.2.1 SRK Scope of Services

Geology and resource modelling.

Geotechnical investigation and pit slope design.

Hydrogeology.

Open pit design and optimisation.

Equipment selection, production scheduling and manpower planning.

Operating cost estimation.

Capital cost estimation.

1.2.2.2 AMEC Scope of Services

Tailings Management Facility (TMF).

Water Supply Dam (WSD).

1.2.2.3 Golder Associates (UK) Ltd Scope of Services

Review of regulatory framework.

Public consultation and disclosure strategy and action plan.

Project description (mine characterisation).

Impact assessment and mitigation.

Monitoring and management plans.

1.2.2.4 SENET Scope of Services

Feasibility study management.

Metallurgical testwork.

Process plant design.

Infrastructure and logistics.

Plant and infrastructure capital and operating cost estimate.

Financial modelling.

Bankable feasibility study and optimisation update (BFSOU) report.


1.3 PROPERTY DESCRIPTION AND LOCATION: OWNERSHIP AND HISTORY

1.3.1 Location and Access

The Bambari Exploration Permits (also known as the Roandji property) cover an area of

approximately 913 km2 along with the Passendro Mining Licence covering 357 km2 are

located some 320 km east-northeast of Bangui (440km by road) and are centred

approximately 60 km north of the town of Bambari. Figure 1-1 indicates the position of CAR

and the location of the prospects in relation to the geography of Central Africa.

Figure 1-1 Location of CAR and AXMIN Exploration Prospects

1.3.2 Mineral Rights

The Bambari property is held under a Mining Licence No PE001/10, issued to the Société des Mines d‟Or de la Ouaka (SOMIO Toungou) a wholly owned subsidiary of AXMIN Limited on 5th August 2010. The licence is valid for 25 years and is valid for the exploitation of the Passendro gold orebody.

In addition AXMIN through another wholly owned subsidiary Aurafrique SARL holds two exploration licences, Bambari 1 (Number RC4-396, 480,80 km²) and Bambari 2 (Number


RC4-397, 432,20 km²), which were issued on 7th August 2010, and are valid for three years renewable twice for two further periods of 3 years for a total of 9 years and valid for gold.

The total area of the two permits is approximately 1,270 km2 and geographical coordinates

for the permits are shown in Table 1-1.

Table 1-1 Exploration License Boundary Coordinates 1. Mining Licence No PE001/10 (Area: 357,00 km2)

2. Bambari 1: RC4-396 (Area: 480.80km2)

3. Bambari 2: RC4-397(Area: 432.2 km2)

POINT EUTM_84 NUTM_84 Northing Easting

A 473,824 663,482 6°00'8,8" 20°45'48,5"

B 470,600 671,190 6°4'19,8" 20°44'3,5"

C 461,665 687,407 6°13'7,8" 20°39'12,5"

D 468,952 693,635 6°10'58,8" 20°50'42,5"

E 482,868 683,436 6°10'58,8" 20°50'42,5"

F 481,084 679,506 6°8'50,8" 20°49'44,5"

G 484,495 677,786 6°7'54,8" 20°51'35,5"

H 485,509 676,097 6°6'59,8" 20°52'8,5"

I 485,785 674,531 6°6'8,8" 20°52'17,5"

J 478,714 669,191 6°3'14,8" 20°48'27,5"

Points UTM-E UTM_N Lat Long

a 431,903 700,883 6°20'25,7" 20°23'3,5"

b 422,638 711,304 6°26'4,7" 20°18'1,5"

c 429,120 711,296 6°26'4,7" 20°21'32,5"

d 431,020 707,547 6°24'2,7" 20°22'34,5"

e 440,599 701,702 6°20'52,7" 20°27'46,5"

f 440,512 707,291 6°23'54,7" 20°27'43,5"

g 446,409 705,811 6°23'6,7" 20°30'55,5"

h 450,215 701,632 6°20'50,8" 20°32'59,5"

i 459,521 697,571 6°18'38,7" 20°38'2,5"

j 463,300 688,800 6°13'53,2 20°40'5,7"

k 461,665 687,407 6°13'7,8" 20°39'12,5"

l 470,600 671,190 6°4'19,8" 20°44'3,5"

m 457,693 676,264 6°7'4,8" 20°37'3,5"

n 453,766 685,386 6°12'1,8" 20°34'55,5

o 449,007 690,610 6°14'51,8" 20°32'20,5"

p 443,938 692,487 6°15'52,8" 20°29'35,5"

q 440,993 696,574 6°18'5,8" 20°27'59,5"

Points UTM-E UTM_N Lat Long

A 459,521 697,571 6°18'38,7" 20°38'2,5"

B 469,900 703,300 6°21'45,5" 20°43'40,2"

C 489,500 688,400 6°13'40,5" 20°54'18,3"

D 487,200 669,900 6°3'38" 20°53'3,6"

E 490,669 654,665 5°55'21,9" 20°54'56,5"

F 487,594 651,411 5°53'35,9" 20°53'16,5"

G 486,549 652,516 5°54'11,9" 20°52'42,5"

H 486,735 659,916 5°58'12,9" 20°52'48,5"

I 481,755 662,404 5°59'33,8" 20°50'6,5"

J 478,714 669,191 6°3'14,8" 20°48'27,5"

K 485,785 674,531 6°6'8,8" 20°52'17,5"

L 485,509 676,097 6°6'59,8" 20°52'8,5"

M 484,495 677,786 6°7'54,8" 20°51'35,5"

N 481,084 679,506 6°8'50,8" 20°49'44,5"

O 482,868 683,436 6°10'58,8" 20°50'42,5"

P 468,952 693,635 6°16'30,7" 20°43'9,5"

Q 463,300 688,800 6°13'53,2" 20°40'5,7"


1.3.3 Interest in the Property

The Mining Licence referred to in the Mining Code as a “Permis de Exploitation” is held

100% by SOMIO Toungou and both Exploration Licences, referred to in the Mining Code as

“Permis de Recherche”, are held 100% by Aurafrique.

In order to keep the Mining Licence in good standing the company must commence development and exploitation within 2 years of the issue of the permit although there are provisions for extensions for this period if required. In addition the company is required to pay annual surface taxes to the CAR government of FCFA 20 000 per km2.

1.3.4 Royalties

Both the Mining Licence and the Exploration Licences are subject to a royalty payable to the government on production, which was originally set at 2.25% by law and is confirmed at this level in the Convention signed between the CAR Government and Aurafrique SARL.

The Mining Licence is subject to a 2.0% net smelter royalty (“NSR”) payable to United Reef Limited (a company previously related to the Company) from production once all capital expenditure has been recovered by Aurafrique. The Company has the right to purchase, during the initial five years of production from the Bambari permit, all or part of the 2% NSR at a rate of Cdn$500,000 for each 0.5% NSR interest.

1.3.5 Mineralised Zones

Other than historic (1929 to 1951) alluvial gold mining by French colonial companies in drainages within the Bambari property and small scale artisanal mining for alluvial gold in the Ndassima area, there are no other sites of mineralization that have been exploited commercially and there is no present or historic mining infrastructure.

1.3.6 Accessibility

Access into the property and to the Aurafrique field camp near Ndassima village is by an all-weather dirt road from the town of Bambari by way of a barge crossing at the Baidou River (which has a 12 tonne capacity). The distance from Bambari to Ndassima camp is approximately 60 km and takes 90 minutes. For heavier traffic such as bulk fuel shipments and heavy equipment, the property can be reached by way of the town of Ippy and the village of Djoubissi, which avoids the Baidou river crossing.

The distance from Bangui to Bambari is 380 km and the road journey by way of the main towns of Sibut and Grimari takes between seven and nine hours. By charter aircraft, the journey from Bangui Mpoko International Airport to the laterite airstrip at Bambari takes just over one hour.

Access to Aurafrique‟s gold prospect areas within the Passendro grid from the Ndassima camp is by an all-weather laterite road and within the active exploration areas, access is limited to bush roads and drill access tracks. To the north, Aurafrique has made a dry season access road up to the Topa iron ore prospect and this provides access also to the North 1, North 2 and Louba reconnaissance gold exploration grids within the Bambari 1 Exploration Licence.

1.3.7 Climate

The central part of the CAR has one distinct wet period from mid-June until mid-November.

There is usually some rainfall in February and March, which are known as the “mango rains”.

Maximum dry season temperatures range between 35°C to 40°C, with wet season


temperatures varying from 15°C to 25°C. For exploration purposes, year round access to the

Passendro gold prospects is achievable and fieldwork, including drilling, albeit more difficult

in the wet season, can be undertaken.

1.3.8 Topography, Elevation and Vegetation

The topography in areas of the Bambari property that are underlain by Archaean greenstone rocks is typified by northwest-trending ridges and hill masses of banded ironstone formation rising from 100 to 300 metres above the surrounding more gently undulating terrain. Altitude within the property ranges from 500 metres to 800 metres above sea level. The property straddles the watersheds of the Ouaka and Baidou drainage systems. Both these rivers flow year round and the associated dendritic drainage system comprises numerous first and second order streams, some of which are perennial. The vegetation cover across the Bambari property is classified as savannah forest (small trees, thicket and grasses) though gallery forest is developed along drainages and there are stands of tropical forest in places. Much of the vegetation around villages is secondary growth. Current land use by the local population consists primarily of subsistence farming including manioc, peanuts, sesame, cotton and tobacco.

1.3.9 History

There is only one documented report of previous production on the property and this was carried out by the Compagnie Équatoriale des Mines (CEM) during the Colonial period. In a regional prospecting programme in 1929, CEM discovered two alluvial gold deposits near Roandji village (within the Bambari Permit and inside the Passendro exploration grid). The Roandji alluvial gold fields were mined commercially by CEM from 1929 to 1951, with total gold production estimated at over 1.5 tonnes but no further exploration work was carried out until Asquith Resources Inc (Asquith‟s) involvement in 1996.

The prospecting permit (or APM) for the Bambari property was initially granted in 1996 to Howe Centrafrique SARL, a CAR subsidiary of United Reef Limited (“United Reef”). United Reef is a public Canadian junior resource exploration company. Under an agreement dated 25th January, 1996 between United Reef and Asquith, the latter acquired a 100% undivided beneficial interest to the Bambari APM, subject to a 3% NSR retained by United Reef, which was subsequently reduced to 2%, payable after all capital expenditures have been recovered. Howe Centrafrique S.A.R.L. held legal title in favour of Asquith until 1998 when the original APM was cancelled and a new APM was issued to Asquith‟s CAR subsidiary, Aurafrique SARL.

Aurafrique was subsequently granted a Type A exploration permit for the Bambari property with exclusive exploration rights for gold and silver. In 2001, the Type A exploration permit was amended by the Minister of Mines and Energy to include exclusive rights to explore for iron, copper, lead, zinc and nickel.

In 2001 AXMIN undertook a reverse takeover (RTO) of Asquith thereby acquiring Aurafrique and the Bambari Permit.

Regional Stream Sediment Sampling Programme 1997

In 1997, Asquith carried out a regional scale stream sediment sampling survey designed to

generate exploration targets within a 600 km² target area located in the east-central portion

of the Bambari property centred on the village of Ndassima.


Detailed Follow-up Exploration by Asquith 1998

Within the 64 km2 Passendro grid, Asquith carried out a detailed soil and termite mound

sampling programme as well as trenching and Rotary Air Blast (RAB) drilling of the principal

soil anomaly that was delineated – what is now the “Main Zone” mineralised zone. Asquith

sampled 5,663 termite mounds over the westernmost 40 km2 of the Passendro grid between

29th April, 1998 and 25th August, 1998.

Detailed Follow-up Exploration by AXMIN 1999-2004

AXMIN reviewed the available Asquith data in May 1999 and entered into a Heads of

Agreement with Asquith to take out an exclusive six month option to become involved in the

project.

Reverse Circulation (RC) Drilling Programme 1999-2000

The RC drilling programme was carried out in two phases in late 1999 and early 2000 and

comprised 144 RC drill holes and 14 RAB drill holes, totalling some 7,462 metres of drilling.

The main focus of the drilling programme was the central portion of the Main Zone soil

anomaly. However, the French Camp soil anomaly was also tested with 4 RC fences and the

Katsia soil anomaly with one RC fence.

Reconnaissance Generative Soil Sampling Programme 2000

In parallel with phase 2 of the RC drilling on the Main Zone and French Camp prospects,

AXMIN completed reconnaissance scale conventional soil and lag geochemical surveys

across 200 km2 (10%) of the Bambari property between March and June 2000.

Follow-up Soil Sampling Programme 2000

Infill soil sampling and more detailed mapping (1:2,000 scale) covering the most significant

multi-line soil anomalies identified during the March to June 2000 reconnaissance

programme were completed on 200 x 50 metre centres, giving a sample density of 105

samples/km². The interpretation of the results of this follow-up programme confirmed the

following, previously identified, soil anomalies:

Ao Grid - three anomalies

Ndassima Grid (including the French Camp Extension now known as Nguetepe) – three anomalies

Louba Grid - one anomaly. RAB Drilling Programme 2002

A reconnaissance RAB drilling programme commenced during the second quarter of 2002.

The drilling programme was designed to test extensive gold in soil anomalies within the

Passendro Grid and was based on the results of the Asquith soil archive study and 1:2,000

scale mapping of the Main Zone and French Camp mineralised trends.

The RAB drilling programme resulted in the identification of seven targets worthy of follow-up

RC and core drilling within the Main Zone, French Camp and Katsia mineralised trends.

Core and RC Drilling Programmes 2003 to 2005

In May 2003 AXMIN began systematic core drilling at Passendro. Core drilling and RC

drilling between May 2003 and August 2004 were concentrated at the French Camp, Katsia

and Main Zone Prospects and these drilling operations were aimed at defining resources.


Exploration drilling was also commenced at the Bacanga Head, Katsia and Ngodo

Prospects. Based on the geological and analytical information generated by these drilling

programmes SRK Consulting prepared a Mineral Resource Estimation in August 2004 and

this was updated in August 2005.

Drilling continued up until early 2006 with the aim of upgrading the Mineral Resource

classification for Katsia and Main Zone and initial investigation of the Baceta and Barbacoa

Prospects.

Core and RC Drilling Programmes 2005 to 2008

The core and RC drilling programme continued after the cut off date for the resource evaluation carried out for the pre-feasibility study and a new resource evaluation was carried out in June 2007 for this Feasibility Study. Drilling continued until the end of June 2008 and all the results were incorporated in a resources update in May 2009.

Mapping and Sampling Programme 2009

During 2009 a detailed mapping programme was undertaken. The objective of the mapping

was to compile a definitive geological and structural plan to cover the Passendro project

areas within which specific target areas were reviewed in detail.

During the second half of 2009 a trenching programme was undertaken on the Ndassim

prospect. Four trenches were excavated 3 of these intersected mineralized zones of

mineable width which contained visible gold.

In addition during 2009 the distribution of trace elements in the gold mineralised zone and in

the country rocks was examined in more detail than previously. 626 samples were selected

from the drilling sample storage for multi-elements assay.

Scoping, Pre-feasibility and Feasibility Studies: 2004 - 2008

Scoping Study

GBM Minerals Engineering Consultants Limited (GBM) was retained by AXMIN Inc. in

November 2004 to conduct a scoping study of the Passendro Gold Project located in the

Central African Republic (CAR).

Pre-Feasibility Study

In March 2005, AXMIN retained GBM to coordinate an independent pre-feasibility study of

the Bambari Exploration Licence located in the Central African Republic (CAR), to comply

with the Canadian National Instrument 43-101 and accompanying Guidelines, AXMIN

concurrently retained the following organisations to provide specialist services and sections

of the Report:

o SRK Consulting - Resource Estimation and Mine Planning o AMEC Earth & Environmental - Tailings Management Facility o Golder Associates (UK) Ltd - Requirements for Environmental & Socio Impact

Assessment (ESIA) The pre-feasibility was updated to include more recent additions to the reserves and

inclusion of column leaching test results. Reporting on the mining and geo-technical aspects


of the tailings dam and heap leach pads and ponds was conducted by SRK and AMEC

respectively.

At a meeting on 23rd February 2006, the scope of the study was increased from 2.0 Mtpa

CIL and included studies detailing the follow process options.

o 3.0 Mtpa CIL Plant – Base Case o 2.0 Mtpa CIL Plant o 3.0 Mtpa Heap Leach Plant o 2.0 Mtpa Heap Leach Plant

Details of the Preliminary Feasibility Report are contained in a report:

o Sept 2006, 02, GBM, Passendro Gold Mine Project - Preliminary Feasibility Study for AXMIN, GBM-0240, 0240-PFS-001 Rev 1.doc.

Feasibility Study 2006-2008

Between 2006 and 2008 a detailed Feasibility Study was carried out in parallel with an Environmental and Social Impact Assessment. Following the completion of these studies on 15th April 2008 AXMIN filed a 43-101 Technical Report:

http://www.AXMINinc.com/site/Newsnbsp/News2008/April152008.aspx.

A consultation process was also undertaken. This involved presenting and explaining the project and is impacts, both positive and negative, to all the stakeholders. Presentations were made to local villagers in the project area. This was followed by presentations at workshops with local authorities and NGOs in Bambari and finally with national government representatives and other NGOs and interested parties in Bangui. The recommendations and conclusions of these workshops and consultations were incorporated in the final version of the ESIA.

http://www.axmininc.com/site/Newsnbsp/News2008/April152008.aspx


1.4 EXPLORATION & GEOLOGY

1.4.1 Introduction

Initial geochemical exploration commenced in 1997. Original discoveries occurred as the

result of detailed mapping and geochemical studies which identified two discrete anomalous

areas approximately 5 km long and named as the Passendro Project area. Within these

areas, individual zones of mineralization have been described and 8 of these, French Camp,

Katsia, Main Zone, Baceta, Barbacoa, Bacanga Head, Mbourou and Nguetepe, have been

the subject of detailed follow up exploration by AXMIN. RC and RAB sampling commenced

in 1999 and follow up core drilling started in 2003. Initially samples were shipped to SGS

and then OMAC Laboratories (OMAC) for both sample preparation and assay.

Subsequently, Alex Stewart Laboratory Ltd has set up and is managing an on site sample

preparation facility with assaying carried out by OMAC in Ireland. Full QA/QC protocols are

in place both on site and at OMAC and information is collated to allow a detailed study of the

QA/QC results to be carried out.

Up to the end of the current Feasibility Study resource drilling (June 2008) some 69,000m of

core and 149,000m of RC drilling had been conducted on the eight principal orebodies at

Passendro, and this forms the principle source of data informing the current Mineral

Resource estimate dated June 2009.

1.4.2 Geology of the CAR

The geology of the CAR comprises an Archaean basement complex including granite

greenstone belts, Proterozoic sedimentary cover, Palaeozoic sedimentary cover and

Mesozoic to Recent sedimentary sequences. The Precambrian basement can be sub-divided

as follows:

A widespread gneissic-charnokitic series comprising high-grade metasediments and granitoids,

The Mbomou River mafic-ultramafic complex (2.9 Ga) in the south east of the country, and

The granitoid-greenstone belts of Bandas (2.8 Ga), Boufoyo-Dekoa and Bogoin.

AXMIN regards the Archaean greenstone belts, shown in Figure 1-2 in the CAR as the

westward extension of Archaean greenstone belts in northeast DRC, which extend from Kilo-

Moto in northeast DRC (9 million ounces of gold production since 1904) west

northwestwards to the CAR border.

The Archaean basement is overlain unconformably by Lower and Mid Proterozoic sediments

comprising extensive sheets of quartzite. The Lower Proterozoic sequences are

distinguished by zones of migmatisation and granitoid intrusives. Field observations at

Bambari suggest that the Proterozoic cover overlies the Archaean greenstone belt on a

thrust surface.

Overlying unconformably these Lower to Mid-Proterozoic sedimentary sequences, in

restricted often fault-bounded basins, are Upper Proterozoic age rocks comprising tillites,

quartzites and pelites, shales and carbonates.

Finally, remnants of the Phanerozoic cover comprise two areas of Cretaceous age fluviatile

sequences – the Carnot Sandstones in the west and the Mouka-Ouadda in the east. These


have economic significance since most CAR diamonds are produced from recent alluvial

deposits either on or close to these sandstone and conglomerate beds.

Figure 1-2 Location of AXMIN permits in relation to regional outcrop of Archaean greenstone belts of Central Africa

1.4.3 Local Geology

Original discoveries occurred as the result of detailed mapping and geochemical studies

which identified two discrete anomalous areas approximately 5 km long and named as the

Passendro Project area. Within these areas, individual zones of mineralization have been

described and 8 of these, French Camp, Katsia, Main Zone, Baceta, Barbacoa, Bacanga

Head, Mbourou and Nguetepe, have been the subject of detailed follow up exploration by

AXMIN.

The Passendro Project is located within the 357 km² Passendro Mining Licence which is

bounded on three sides by the two Bambari Permits, which cover a 95km long strike length

of the 2,800 million years old (2.8 Ga) Bandas Granite-Greenstone Belt (BGB). The

greenstone belt is exposed as a “window” within a regionally extensive sheet of tectonically

emplaced Proterozoic quartzites and has an exposed width of between 5km and 20km.

The Bandas belt is analogous to the Upper Kibalian (in the DRC) and is dominated by

banded iron formation (BIF), ferruginous quartzites and intermediate to acid volcanics and

volcaniclastics. This stratigraphy has been intruded, and is surrounded by a syn to post-

kinematic suite of trondjemite-diorite intrusives, granodiorite intrusives and large granite

bodies, and by gabbro and diorite sills. The greenstones in the Bambari property have


generally been affected by upper greenschist to lower amphibolite grade metamorphism and

by intense tectonic activity.

The topography of the Bambari property is typified by elongate sinuous ridges and hills of

BIF flanked by aprons of cemented BIF scree and extensive pavements of indurated laterite.

These BIF hills rise up to 300 m above the surrounding terrain, which is underlain by the

softer metasedimentary and volcanic rocks.

The sequence described above has been traced throughout the Bambari-Bakala area to

reveal a number of major structural repetitions due to southwest dipping thrust faulting. With

the assistance of image interpretation of airborne magnetic data, a clear structural pattern

has emerged. This pattern, referred to by geologists as a “duplex”, results from the stacking

of individual thrusts in an area of irregularity along a regional sole thrust. The increased

understanding of the Passendro Sequence and its complex structural history is greatly

assisting exploration targeting.

Figure 1-3 Geological map showing location of AXMIN’s Bambari Project licence areas in relation to the local greenstone belt geology and structures

1.4.4 Deposit types

Contoured soil geochemical data derived from the conventional and termite soil surveys over

the Passendro grid Main Zone and French Camp areas show:


The Main Zone is a 4.5 km long, 200 to 500 m wide, northwest-trending soil anomaly that overlies a saprolitised chlorite-sericite schist unit with intercalations of ferruginised schist and BIF and a zone of tourmaline-quartz veining. Two northwest-trending BIF ridges flank the saprolitised schist zone. The Main Zone has been sub-divided in to MZ South, MZ Central and MZ North.

Katsia is a north-northwest trending anomalous zone located to the southeast of MZ South, which has a strike length of some 2 km and, while it is more or less contiguous with MZ South, the two zone have significantly different trends and are separated by a major structure – the Katsia Fault.

The French Camp Trend anomaly is northwest-trending, 4.5 km long and occurs along the contact between BIF and chlorite schist. This mineralised trend covers the French Camp, Ngodo and Baceta prospects.

Gold mineralisation at Passendro is hosted by shear zones within quartz sericite schists,

quartz schists and Banded Ironstone Formation (BIF) in a series of WNW to NNW trending

tabular shaped bodies, which dip to the southwest at 35° to 75°. Gold mineralisation is

developed in areas of high strain in shear zones predominantly within sericite-chlorite schists

and quartz schists more often than not close to the contacts with BIF units. Mineralisation is

often associated with quartz-tourmaline veining which is widespread in the Passendro area.

The exception to this style of mineralisation is French Camp where gold mineralisation is

hosted by BIF and is associated with pyrite and pyrrhotite, which have replaced iron oxides in

the BIF. Gold mineralisation is thought to have been contemporaneous with peak

metamorphism at upper greenschist facies and accompanied the shear zone deformation.

1.4.5 Exploration

The following figure shows the extent of the current drilling at Passendro in relation to the

eight Mineral Prospects described in this report. Mbourou is located some 12km east-

southeast of the Nguetepe prospect. Although a large amount of drilling has been carried

out since the previous Mineral Resource estimate produced in 2007, the majority has been

undertaken in areas outside the current prospect areas and only limited drilling has been

undertaken on Main Zone, Katsia, Baceta and Mbourou which can be considered appropriate

for providing an update to the previous estimates for these deposits.


Figure 1-4 Location of main mineralised prospects and AXMIN drill collars in the Passendro Project area

Table 1-2 summarises the total drilling carried out at Passendro to date which is used for the

current updated Mineral Resources reported here.

Table 1-2 Drilling Breakdown by Project within the Bambari Permit

Meterage Total to June 2008

Prospect Air lift

CH DC DP DT Pit RAB RC TR Total

Katsia 120 0 17892 0 0 3 4407 11638 0 34060

Main Zone 164 0 21274 0 927 1 0 45233 0 67599

Main Zone North 150 0 4489 0 0 0 314 15179 0 20132

Main Zone plateau 0 0 0 0 0 0 235 0 0 235

Main Zone South 80 0 3066 0 77 0 757 8907 0 12887

French Camp 80 0 6285 0 0 2 1012 14288 0 21667

Bacanga Head 0 0 9005 0 0 1 1018 4375 0 14399

Baceta 0 0 1995 0 0 0 1587 13254 230 17066

Mbourou 0 0 0 0 0 0 0 0 109 109

Mbourou East 0 0 386 0 0 0 0 2709 206 3301

Mbourou North 0 0 172 0 0 0 0 566 242 980

Barbacoa 0 42 2687 0 0 0 1587 13254 230 17800

Nguetepe 0 0 1457 0 0 0 334 19482 422 21695

Bacanga Head

Nguetepe

Main Zone

Barbacoa

KatsiaBaceta

French Camp

Mbourou

Pre 2005 drilling2005-2007 drilling2007-2009 drilling


The results of the exploration largely confirmed previous assumptions regarding the

continuity of the mineralised zones at Katsia and Main Zone. At Main Zone it is now

recognised that a series of north-south trending faults offset the orebodies identified through

drilling and this has been reflected in the updated geological modelling. Table 1-2 shows the

extent of drilling at Main Zone and the postulated fault locations which are considered to be

offsetting the mineralisation by up to 30m laterally in the south of the Central domain.

1.4.6 QAQC

Prior to February 2004, all samples were sent unprepared to OMAC where sample

preparation was undertaken. In February 2004 Alex Stewart Laboratory Ltd (Alex Stewart)

established a sample preparation facility on site. This facility conducts the drying, jaw

crushing and milling of samples to produce 150 g splits which are then sent to OMAC in

Ireland for analysis.

Analytical work was carried out at the independent OMAC laboratories in Ireland. The half

core samples were subjected to a full sample preparation on site followed by a 50 g fire

assay with an AA finish at OMAC. Pulp duplicates (5%), blanks (5%) and Geostats standard

materials (5%) were used to monitor OMAC laboratory performance during first pass

analysis. Check assaying was carried out on a quarterly basis on 20% of all >500 ppb

samples. These samples were chosen to honour the population statistics.

The fourth quarter of 2004 saw the introduction of AXMIN‟s revised QA/QC protocol and

these have remained unchanged through to the period of the current study. The protocols

are summarised as follows and applies to core drill samples:

Blanks: The routine insertion of 5% (1 in 20) blank samples into the sample numbering sequence, one at the beginning of each hole and the rest after sections believed to carry significant grade. The positions of these samples are at the discretion of the geologist responsible for logging the drill hole.

Standards: The routine insertion of 5% (1 in 20) Geostats standard reference materials into the sample numbering sequence. Five standard types were used (with a range of grades and both oxide and sulphide matrix types).

Pulp duplicates: The routine insertion of 5% (1 in 20) pulp duplicates systematically into the sample numbering sequence. The selection of sample to be duplicated was random.

Check assaying: Quarterly check assaying comprising 20% of all samples > 0.5 ppm Au chosen in such a way as to honour the same statistical spread of results as seen in the original dataset.

The QA/QC protocol used for RC drill samples was a slightly modified version of the core drill sample QA/QC protocol and is summarised as follows: o Blanks: Insertion of a blank as the first sample of each hole. This is around 3.5%

when sampling each metre and around 15% when sampling at 5 m composites. o Standards: Insertion of 5% Standard material systematically into the numbered

sequence every 20 samples taken, the choice of the five standards in use being at the discretion of the RC rig geologist.

o Pulp duplicates: Insertion of 5% pulp duplicates systematically into the numbered sequence. The sample to be duplicated is chosen randomly but avoiding samples from sections of the hole that are unlikely to have any significant grade.

During SRK‟s original 2004 site visit, it was recommended that the extant procedures should

be modified to improve the quality of the overall geological and assay data. SRK‟s

recommendations, which AXMIN then implemented, were as follows: The core is cut for


sampling at right angles to dip and strike of the lithology/foliation. This ensures that both

halves of the core are as similar as possible geologically and therefore that any grade

variation between these revealed following any subsequent check analyses is a function of

the sample preparation and assaying and the inherent grade variability rather and not any

geological feature in the core. Subsequent site inspection visits by SRK confirmed the

adoption of these protocols.

Overall SRK considers the quantity and quality of the data available is sufficient to support

the Mineral Resource estimates as reported here.


1.5 MINERAL RESOURCES

Mineral Resources have previously been estimated by SRK and reported in accordance with

the guidelines set out by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM)

and detailed in the National Instrument 43-101. Grade interpolation was carried out using

ordinary kriging and classification of the Mineral Resource is based on geological continuity,

borehole spacing and the results of a structural variography analysis. SRK has derived a

Mineral Resource estimate for the Passendro Project dated 12th June 2009, of:

Measured and Indicated Resources for all 8 of the Passendro mineralised bodies are:

31.5 Million tonnes, 2,027,000 ounces at an average grade of 2.0 g/t Au, and

Inferred Resources:

21.6 Million tonnes, 1,105,000 ounces at an average grade of 1.6 g/t Au

Of these Measured and Indicated Resources 94% are contained within the four main

mineralised bodies, namely the Main Zone (950 koz), Katsia (460 koz), French Camp (326

koz) and Bacanga Head (175 koz).

Individual Mineral Resource estimates were produced for each of the eight prospects within

the Passendro licence. The French Camp, Bacanga Head, Barbacoa and Nguetepe

prospects were estimated in 2007 while the Main Zone, Katsia, Baceta and Mbourou

prospects were updated in 2009.

In all cases the initial model wireframes were defined on either assay or composite data as

the geological information provided by AXMIN was not considered accurate enough for

detailed geological domaining. Notwithstanding, broad geological domaining was

investigated at French Camp, Katsia and Main Zone and this information was used during

the wireframing procedure to influence the extent of individual wireframes. However, the

final orebody wireframes used for the final Mineral Resource estimation work are primarily

based on grade information.

All final grade estimates are based on ordinary kriging algorithms produced using the

Geovariances Isatis software package. Wireframing was carried out using either GEMS or

DATAMINE mining software.

Density data has been collected from sampling of complete core from selected drillholes in

the Passendro deposits. While there are variations through the oxidation profile and

between the lithological units so far logged, at Main Zone and Katsia, there are already

sufficient samples to support the delineation of oxide and sulphide domains, and at Katsia,

and Main Zone transition zones have also been defined.

The updated semi-variogram models have provided more detail of the data variability in each

of the four zones of mineralisation with ranges of between 90-200 m. However, the lack of

drill intersections in the down dip directions has meant that meaningful directional semi-

variograms cannot be produced for some of the smaller deposits. Good results were

obtained from modelling of the downhole semi-variograms which allowed accurate definition

of the nugget variance thus improving the reliability of the final kriging estimate.


SRK has derived a Measured and Indicated Mineral Resource estimate for the Passendro

Project of 31.5 Mt with a mean grade of 2.0 g/t (2.0 Moz Au) and an Inferred Mineral

Resource estimate of some 21.6 Mt at a mean grade of 1.6 g/t (1.1 Moz Au). SRK is

confident that this Mineral Resource has the potential to be exploited economically and that it

is supported by sufficient data of sufficient quality to enable it to be classified in this manner.

The Mineral Resource statement comprises all the estimated blocks within the geological

wireframes and above specific cut off grade thresholds, and is representative of the

estimated in-situ Mineral Resource for each of the zones of Passendro mineralisation.

Blocks have been classified as either Measured, Indicated, or Inferred Mineral Resources

according to the guidelines set out by the CIM and incorporated into national Instrument 43-

101.

NB: Mineral Resource reported at a block cut off grade of 1.2 g/t Au for French Camp, Katsia

and Bacanga Head, 0.8 g/t Au for Main Zone and at 1.0 g/t Au for Baceta, Barbacoa,

Mbourou and Nguetepe.


Table 1-3 Passendro Mineral Resource Statement, 12th June 2009

Domain

REDOX

Measured Indicated Measured +Indicated Inferred

Tonnes

(Mt)

Grade

(g/t)

Gold

(koz) Tonnes (Mt)

Grade

(g/t)

Gold

(k.oz) Tonnes (Mt)

Grade

(g/t)

Gold

(koz) Tonnes (Mt) Grade (g/t)

Gold

(koz)

Katsia

Oxide 2.96 3.3 315 2.96 3.3 315 0.2 2.3 17

Transition 1.20 2.8 106 1.20 2.8 106 0.2 3.0 24

Sulphide 0.59 2.2 42 0.59 2.2 42 1.1 2.5 90

Total 4.74 3.0 463 4.74 3.0 463 1.60 2.5 130

Main

Zone

Saprolite 0.41 1.7 23 1.00 1.3 42 1.41 1.4 65 0.03 1.1 1

Oxide 1.53 1.6 80 4.21 1.6 213 5.74 1.6 293 0.27 1.2 10

Transition 0.01 1.4 1 4.98 1.5 241 5.00 1.5 242 0.28 1.2 10

Sulphide 7.08 1.5 348 7.08 1.5 348 12.42 1.3 532

Total 1.96 1.6 103 17.27 1.5 844 19.22 1.5 948 12.99 1.3 553

French

Camp

Oxide 0.9 3.1 90 0.8 3.2 85 1.7 3.2 175 0.1 2.0 5

Sulphide 0.3 2.7 25 1.6 2.4 126 1.9 2.4 151 1.7 2.0 110

Total 1.2 3.0 115 2.5 2.7 210 3.7 2.8 326 1.8 2.0 115

Bacanga

Head

Oxide 1.23 2.4 94 1.23 2.4 94 0.0 3.1 1

Transition 0.63 2.5 50 0.63 2.5 50 0.1 2.2 9

Sulphide 0.25 3.9 32 0.25 3.9 32 0.7 2.1 48

Total 2.1 2.6 175 2.1 2.6 175 0.8 2.2 59

Baceta

Oxide 0.9 1.7 50 0.9 1.7 50 1.13 1.8 65

Fresh 0.4 1.7 22 0.4 1.7 22 1.17 1.5 57

Total 1.3 1.7 72 1.3 1.7 72 2.3 1.7 122

Mbourou

Oxide 0.23 1.8 13

Transition 0.06 1.4 3

Fresh 0.11 1.3 5

Total 0.41 1.6 21

Barbacoa Oxide 0.34 2.4 27 0.3 2.4 27 0.67 2.3 51

Total 0.34 2.4 27 0.3 2.4 27 0.67 2.3 51

Ngetepe Oxide 0.2 2.4 15 0.2 2.4 15 1.1 1.5 54

Total 0.2 2.4 15 0.2 2.4 15 1.1 1.5 54

TOTAL

Saprolite 0.41 1.7 23 1 1.3 42 1.41 1.4 65 0.03 1.0 1

Oxide 2.43 2.2 170 10.64 2.3 799 13.03 2.3 969 3.7 1.8 216

Transition 0.01 3.1 1 6.81 1.8 397 6.83 1.8 398 0.64 2.2 46

Sulphide 0.3 2.6 25 9.92 1.8 570 10.22 1.8 595 17.2 1.5 842

Total 3.15 2.2 219 28.37 2.0 1808 31.49 2.0 2027 21.57 1.6 1105


1.6 ORE RESERVES

Conventional open pit shovel-truck methods will be used for the mining. The milling rate is

variable dependent upon the ore type, but in general has been determined to be between

3.12 million (oxides) and 2.01 million (sulphides) tonnes per year. Presently, it is envisaged

the mining function will be carried by the mine operator, who may use a mining contractor for

parts of the project.

SRK utilised the geological models to optimise, design and prepare a Mine Plan and costing

schedule. The Whittle 4X software package was used to identify the most economic pit

designs; and the final engineered designs were completed using the Gemcom software, to

facilitate the design of the mining areas and the access ramps. The volumes generated from

the engineered pit designs formed the basis of the mine plan.

The Whittle process requires various input parameters such as unit costs and other physical

parameters and include the following:-

Gold revenue of $1000 per ounce.

Base mining rate of $1.55 per tonne of material, with adjustments for distance to the processing plant, de-watering and the increasing haul from deeper in the pits.

Varying processing recoveries, throughput and costs, which are dependent upon several variables including the ore type (i.e. oxide, transitional or sulphide) and pit location.

Overall general administration and overhead costs, included within the overall processing costs.

The Mine optimisations were conducted utilising the geological block models produced by

SRK Resource geologists, and a series of nested whittle pit shells was produced for each of

the areas. The various pit shells for the Main Zone and Katsia are graphically presented

below in Figures 1-5 and 1-6, with the highlighted option indicating the final selected pit shell

for engineering design. The resultant figures for all of the deposits are presented in the

appendices.

Figure 1-5 Main Zone Whittle Results

0

50000000

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Main ZoneWhittle Output

Ore t Waste t Cash flow

Selected Shell


Figure 1-6 Katsia Whittle Results

In finalising the engineered designs, the studies undertaken by the hydrogeologists, the

geotechnical engineers and the mining engineers were recognised, and the following

parameters modified to suit the local conditions:-

In pit slopes angles

Access ramp gradients and widths

Minimum mining areas. The Whittle process and subsequent engineering has resulted in a series of mining pits in

seven distinct mining prospects:-

Main Zone (13.061M tonnes) – the largest deposit with 6 working areas:

0

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KatsiaWhittle Output


0

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KatsiaWhittle Output



o Main Zone 1 with 3 pits (0.84M tonnes), o Main Zone 2 with 2 pits (5.273M tonnes), o Main Zone 3 with 3 pits (5.424M tonnes), o Main Zone 4 with 3 pits (0.999M tonnes), o Main Zone 5 with 2 pits (0.198M tonnes) and o Main Zone 6 with 2 pits (0.328M tonnes

Katsia (4.285M tonnes) – 3 pits co-joined

French Camp (2.892M tonnes) – single pit

Bacanga Head (1.460M tonnes) – single pit

Baceta (0.805M tonnes) – several shallow pits

Barbacoa (0.309M tonnes) – single shallow pit

Nguetepe (0.699M tonnes) – four shallow pits Figure 1-7 presents the different pits and their relative positions to each other, to the site

boundary and to the Main Plant Area.

Figure 1-7 Location of Deposits

The following three dimensional projections presented as Figures 1-8 to 1-11 indicate the

working pits and their respective waste dump locations.

Main Zone48,120m2

23,251m2

38,728m2

38,727m2

17,032m2

755,408m2

9,003m2

Main Zone 6Bacanga Head

Main Zone 5

Main Zone 4

Main Zone 3

Main Zone 2

Main Zone 1

Katsia

Barbacoa

French Camp

Nguetepe

Baceta

Main Process Plant Area

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